How to Design a Compensation Plan
One way to remain competitive in the marketplace is ensuring that your best and brightest employees remain with your company. Attracting and hiring quality employees is a difficult task, and one that can be very costly. Once you have these people on board, it is important that they remain on board, and do not go fleeing to your competition.
A major tool that you can use to keep your employees satisfied is to learn how to design compensation plan. A good compensation plan lets your employees know that you value them enough to take care of them, but does so in a way that does not hurt the company's profits. This type of plan is a true win-win scenario.
The first thing you will need to do in determining how to design a compensation plan is to do some research to determine what other companies are doing in terms of their compensation plans.
This is especially helpful if you can learn what your competition is paying. If your plan is at least on equal footing with your competition you greatly reduce the temptation of your employees leaving to find greener pastures with another company in your market.
When checking out what other companies are doing for compensation plans, do not just look at the dollar amounts that are being paid, look at how the plans are structured. Plans are made up of a lot of smaller components. Looking at how other plans are structured will give you more ideas about how to have your own plan set up.
You will also want to look at the job descriptions of your employees. When you compare yourself to other companies you will want to be sure your are comparing apples to apples.
On the surface your plan might not seem as generous as your competitors plan, but the job requirements might be completely different with the other company. For instance, your base salary might appear to be lower, but closer examination might reveal that the other company requires employees to work more hours and come in on Saturdays.
Once you have determined the basic structure for your compensation plan, you should look for ways to reward your employees without hurting the company's financial strength.
Many companies are offering more bonuses instead of higher base salaries. This way the employees get rewarded when the company does well, but the company is not saddled with high salary obligations when business is slow.
This is also a good way to reward higher performing employees. When you compensate solely on seniority you create an environment where there is not as much incentive to produce. As long as the employees do enough to keep their jobs they will be rewarded.
A competitive compensation plan is a critical part of employee retention efforts. You need to ensure that the plan you offer is enough to not only attract quality job candidates, but that it is enough to keep those employees with the company for the long term.
If your employees feel that they are important to you, and then you will take care of them, they will do whatever you ask of them. Learn how to design a compensation plan to show your employees how important they are to your company.
A major tool that you can use to keep your employees satisfied is to learn how to design compensation plan. A good compensation plan lets your employees know that you value them enough to take care of them, but does so in a way that does not hurt the company's profits. This type of plan is a true win-win scenario.
The first thing you will need to do in determining how to design a compensation plan is to do some research to determine what other companies are doing in terms of their compensation plans.
This is especially helpful if you can learn what your competition is paying. If your plan is at least on equal footing with your competition you greatly reduce the temptation of your employees leaving to find greener pastures with another company in your market.
When checking out what other companies are doing for compensation plans, do not just look at the dollar amounts that are being paid, look at how the plans are structured. Plans are made up of a lot of smaller components. Looking at how other plans are structured will give you more ideas about how to have your own plan set up.
You will also want to look at the job descriptions of your employees. When you compare yourself to other companies you will want to be sure your are comparing apples to apples.
On the surface your plan might not seem as generous as your competitors plan, but the job requirements might be completely different with the other company. For instance, your base salary might appear to be lower, but closer examination might reveal that the other company requires employees to work more hours and come in on Saturdays.
Once you have determined the basic structure for your compensation plan, you should look for ways to reward your employees without hurting the company's financial strength.
Many companies are offering more bonuses instead of higher base salaries. This way the employees get rewarded when the company does well, but the company is not saddled with high salary obligations when business is slow.
This is also a good way to reward higher performing employees. When you compensate solely on seniority you create an environment where there is not as much incentive to produce. As long as the employees do enough to keep their jobs they will be rewarded.
A competitive compensation plan is a critical part of employee retention efforts. You need to ensure that the plan you offer is enough to not only attract quality job candidates, but that it is enough to keep those employees with the company for the long term.
If your employees feel that they are important to you, and then you will take care of them, they will do whatever you ask of them. Learn how to design a compensation plan to show your employees how important they are to your company.
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